table of contents annual_report.pdf · to confirm the minutes of the 97th annual general meeting...

ABOUT THE INSTITUTE....................................................................................................................................................4

NOTICE AND AGENDA.......................................................................................................................................................6

MESSAGE FROM THE PRESIDENT...............................................................................................................................8

REPORT OF THE COUNCIL

REGISTRY......................................................................................................................................................10

EDUCATION..................................................................................................................................................12

PATHWAYS COMMITTEE ..............................................................................................................................14

ACCOUNTING PROCEDURE COMMITTEE..................................................................................................14

AUDITING AND PROFESSIONAL STANDARDS COMMITTEE..............................................................15

TAX AND OTHER LEGISLATIONS COMMITTEE.....................................................................................15

PUBLIC SECTOR TASK FORCE....................................................................................................................15

INVESTIGATIONS AND DISCIPLINARY COMMITTEE............................................................................15

PUBLIC RELATIONS AND MARKETING......................................................................................................15

CONTINUING PROFESSIONAL DEVELOPMENT.......................................................................................16

CHAPTERS..................................................................................................................................................18

CORPORATE GOVERNANCE..........................................................................................................................................21

PAST PRESIDENTS...........................................................................................................................................................26

FINANCIAL STATEMENTS

REPORT OF THE INDEPENDENT AUDITORS............................................................................................29

STATEMENT OF FINANCIAL POSITION.....................................................................................................35

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME.....................................36

STATEMENT OF CHANGES IN RESERVES..................................................................................................37

STATEMENT OF CASH FLOWS.....................................................................................................................38

NOTES TO THE FINANCIAL STATEMENTS................................................................................................39

TABLE OFCONTENTS

WHO WE AREThe Institute of Chartered Accountants of Zimbabwe (ICAZ) is a statutory body incorporated under the Chartered Accountants Act (Chapter 27:02). ICAZ’s membership consists of Chartered Accountants (Zimbabwe) (CA(Z)) and Articled Accountants (AAZ) (pre-professionals).

VALUE STATEMENTResponsibility:Taking ownership and being dependable.

Honesty:Upholding the truth, no half truths, putting across the right facts, being impartial and full disclosure.

Integrity:Acting in good faith, standing by what we believe in, independent, fair and transparent, do the right thing, walk the talk in respect of all things.

VISIONTo be the pre-eminent professional body in the development and promotion of accountancy, assurance and advisory services, business and good governance practices.

MISSIONTo enhance the international standing and recognition of the qualification Chartered Accountant (Zimbabwe), for the benefit of its members, to support them in providing quality services in the public interest.

ABOUT THEINSTITUTE

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COUNCIL MEMBERSRoy Chimanikire - PresidentGloria Zvaravanhu - Senior Vice PresidentMartin Makaya - Junior Vice PresidentMatthews Kunaka - Chief Executive OfficerTrust ChikohoraTapiwa Chizana David GwandeClyton KazembeFungai KuipaDavid MarangeZondi Kumwenda Tumai MafungaBhekimpilo MpofuClive MukondiwaBeatrix MunyurwaWalter MupanguriGray NeelyBrian NjikizanaBothwell NyajekaJill RickardTinashe RwodziDuduzile ShinyaBernard Tapera

REGISTRARFelicity Karekwaivanane

AUDITORSDeloitte & ToucheWest Block, Borrowdale Office Park, Borrowdale Road, P O Box 267, Harare

PRINCIPAL BANKERSStandard Chartered Bank Zimbabwe Limited2nd Floor, Old Mutual CentreThird Street/Jason Moyo AvenueHarare

PRINCIPAL OFFICEIntegrity House2 Bath RoadBelgravia, Harare

LEGAL ADVISERSMoyo and Jera Legal PractionersCredsure House2nd Floor, Eastwing69 Sam Nujoma AvenueHarare

THE INSTITUTE

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NOTICE ANDAGENDA02

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NOTICE is hereby given that the ninety eighth Annual General Meeting of the Institute of Chartered Accountants of Zimbabwe (ICAZ) will be held on Thursday 14 July 2016 at 1600 hours, at the Elephant Hills Hotel, Victoria Falls, to transact the following business:

1. APOLOGIESTo receive any apologies for absence.

2. CONFIRMATION OF MINUTESTo confirm the minutes of the 97th Annual General Meeting held on Friday 7th August 2015 at 17.00 hours at the Grand Hyatt Hotel, Dubai.

3. ANNUAL REPORT AND FINANCIAL STATEMENTSTo receive the Annual Report of Council, President’s Statement and the Audited Financial Statements for the year ended 31 May 2016.

4. COUNCIL ELECTIONTo receive the names of the members elected to Council.

5. APPOINTMENT OF AUDITORS To propose the appointment of auditors for the 2016-17 financial year.

6. COUNCIL RESOLUTIONS To adopt Council resolutions.

7. ANY OTHER BUSINESS Any other business which may be transacted at an Annual General Meeting of the Institute.

R. ChimanikirePresident

28 June 2016

NOTICE AND AGENDA

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MESSAGE FROMTHE PRESIDENT03

ROY CHIMANIKIRE ICAZ President

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It is such a great honour and privilege for me to give this report for the 2015-2016 presidential year. It has been a fantastic year of many learnings and a lot of incremental personal growth!

I realise, as I pass on the baton to the next group of leaders, that the challenges that confront us are not as great as the opportunities that present themselves. We have 100 years of history behind us and a great legacy that we have inherited. We hold the future of the next generation of Accountants in our hands. It is incumbent on us to have history on our side that this generation served this Institute and this Country well! It is on the shoulders of giants that we stand. As we look over them we see that it is a future brimming with promise and also responsibilities and expectations that come with any role worth fulfilling. In this role, what I have cherished the most is the privilege to serve and the respect and support that I have enjoyed from members in helping me fulfil my mandate. There is a lot more I wish I could have done and wish I can still do for the Institute and I know that together we can continue to build this preeminent body. I have also realized that as the world is changing, our way of doing things has to be dynamic as continuing in our rich traditions can lead to disuptive outcomes. I have seen the openness and candid debate at Council as being a healthy catalyst for this change.

The Institute remains committed to maintaining and enhancing its status as the preeminent accounting professional body in the country. To sustain this position, the Institute has to grow, be dynamic, be accessible and also be relevant to the changing world. This I am sure can be done and will be done. I will give below an update on some of the major highlights of the year, which attest to the results of our collective efforts toward a common goal as we endeavor to achieve our strategic objectives.

COUNCIL REFORMWe have commenced a reform agenda that we believe will transform our leadership culture and the way we do things at ICAZ. This agenda will take several years to complete but I believe will see us responding more dynamically to the challenges that lie ahead.

PATHWAYSWe have started conversations about the way the qualification is attained and how we stream the various entry routes to become a qualified Chartered Accountant. This may see a change in how people are trained and how accessible our qualification is to aspiring accountants. I believe a critical part of this discussion is also how we create different tiers in the profession so that we are able to produce accountants that are relevant at every level of business from small enterprises to large corporations.

PUBLIC SECTOR SKILLS ENHANCEMENTOver the last few years we have worked diligently, with the support of our partners to develop a professional qualification for the public sector accountants. I believe as an Institute we are playing a key role in laying the foundation for the future by ensuring the pillars that support Government are strong. The fruits of these initiatives may not be evident in the short run but will certainly be seen in years to come.

MEMBERSHIP AND MEMBER SERVICESWe continue to explore ways to remain relevant to our members. Our diaspora membership base now comprises about 50% of our overall membership and is vital to our future as an Institute. There are some critical conversations that we have started on how we remain relevant in the lives of our members in the diaspora.

CONCLUSIONI would like to thank members for their support during the year. I would like to also thank Council for their diligent efforts and wisdom in discharging their duties. Our various partners, deserve our appreciation, particularly IFAC for the support that they continue to provide to us. My appreciation also extends to the PAAB, Government and other regulatory bodies that we work closely with as an Institute.

ICAZ will be turning 100 years in 2018 and it is our duty to ensure that the Chartered Accountant (Zimbabwe) profession remains strong and continues to be relevant to Zimbabwe and the World at large for the next 100 years. As the bible says “The race is not given to the strong or the swift…but time and chance happens to all man”. Let us remain resilient and resolute in our efforts to make our country the greatest place on earth!

MESSAGE FROM THE PRESIDENT

R. ChimanikirePresident

5 July 2016 9

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REGISTRY

CouncilThe Council is the primary governing body of the Institute and currently has 23 members. Council is responsible, amongst other things, for policy formulation and ensuring that the Institute maintains stakeholder confidence. The Council is headed by the President, who has been in office for a period of 3 years as junior vice president, senior vice president and president. All Council members are involved in other committees and ad-hoc task forces.

The constituencies currently represented in Council are as follows: Mashonaland 16 members, Matabeleland 4 members, Manicaland 1 member, Midlands 1 member and Diaspora Chapters 1 member. The aim of Council is to gradually change its composition in line with current corporate governance principles. In order for this to be possible, all members are encouraged to participate in the elections that are normally held in April every year.

REPORT OFTHE COUNCIL04

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The Executive Management CommitteeThe Executive Management Committee is made up of the current President of the Institute Roy Chimanikire (Econet Wireless Zimbabwe Limited), the Senior Vice President, Gloria Zvaravanhu (NICOZ Diamond), the Junior Vice President, Martin Makaya (BDO Zimbabwe) and the Chief Executive Officer, Matthews Kunaka.

Members

Membership as at 31 May 2015 1760New Admissions – June 2015 to date 239Deaths – June 2015 to date (4)Resignations/de-registrations – June 2015 to date (4)Reinstated members - June 2015 to date 2Membership as at 31 May 2016 1993

USA58

CANADA 22

BERMUDA 12

CAYMAN IS.24

UK 215

S. AFRICA312BOTSWANA65

NAMIBIA31 ZAMBIA 13

UAE17 AUSTRALIA86

NON-RESIDENT MEMBERS (Total: 960)

OTHER

105

LOCAL MEMBERS (Total: 1033) MALE - FEMALE MEMBERSHIP COMPARISON

Male FemaleYear


0 100 200 300 400 500050010001500

381358342320304286256267287337416491

1,4831,4411,4001,3411,2941,2631,1961,2241,2821,3611,4401,502

200520062007200820092010201120122013201420152016

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2015

74%108/146Pass Rate

Level 12015

69%93/134Pass Rate

Level 2

50

60

70

80

Perc

enta

ge P

ass

Rate

2012 2013 2014 2014

0

50

100

150

200

250

300

350

Perc

enta

ge P

ass

Rate

2012 2013 2014 2015

Level 1

Level 2

Zimbabwe Certificate in Theory Accounting (ZCTA)A total of 129 (93 UNISA and 36 CAA) students passed the ZCTA Level 2 exam. Of the 134 UNISA ZCTA who wrote all 5 modules, 69% was the pass rate which is slightly less than the 2014 pass rate. Table below shows the previous five years’ pass rate comparisons:

Deceased members from 1 June 2015 to date are Geoffrey R. Vine, Rebecca Muchada, Michael Tapera and Shadreck Mazhandu.

Student Accountants (Articled clerks)

Student Accountants registered as at 31 May 2015 775Registrations – June 2015 to date 132Discharges – June 2015 to date (120)Cancellations & suspensions – June 2015 to date (10)Students accountants registered as at 31 May 2016 777

Accredited Training OfficesICAZ currently has 43 Accredited Training Offices. Training Inside Public Practice (TIPP) firms employ 664 Articled Clerks with the Training Outside Public Practice (TOPP) firms having 113 Articled Clerks in their employ.

EDUCATION

Undergraduate ProgrammeThe number of ICAZ undergraduate clerks currently enrolled is 142. The numbers continue to decrease as ICAZ is no longer registering any new UNISA students. Graph below shows the previous five years’ enrolment comparisons:

0

50

100

150

2002012

1882013

1472014

151

2015

1782016

142


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Qualifying Examinations

Initial Test of Competence (ITC)

Enrolment and pass rates for Initial Test of Competence (ITC) Qualifying Examinations for the past five years are as follows:

2016

75.8%113/149Pass Rate

January

20

40

60

80

100

Perc

enta

ge P

ass

Rate

JAN2013

JUN2013

JAN2014

JUN2014

JAN2015

JUN2015

JAN2016

It is pleasing to note that 2016 January ITC results are better than those for January 2015.

Assessment of Professional Competence (APC)

November 2015 assessment was the second year of the APC after the introduction of the competency framework project, which started three years ago when the Part 1 Exam was replaced by the Initial Test of Competence (ITC). The Assessment of Professional Competence (APC) had been developed over a two-year period with extensive input from academics and professionals with administration through the APC Committee. The students are provided with the pre-release material 5 calendar days before they sit for the assessment. Additional information about the scenario provided in the pre-release material as well as the ‘required section’ is provided to candidates on the day of the assessment. Students have a maximum of eight hours to complete the exam. The key considerations in assessing competence are technical, analytical, contextual and communication skills.

Assessment of Professional Competence (APC) results:

2015

90%145/161Pass Rate

2014

82%98/119Pass Rate


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Student AwardsGibson Rwakuda from BDO Zimbabwe was the Best Overall student in the UNISA ZCTA level 2 2015 exams, while Takudzwa Chimanyiwa from EY was the Best Overall CAA full time student.

No student achieved the Honours Role for the 2015 Assessment of Professional Competence. The student who performed best for the APC was Tapiwa Louis Christian Chisango from EY, and he was awarded the W A Duff Award of Merit for being the best Overall student in the APC examination.

Philomina Mandaza from Grant Thornton Camelsa took the District Society Prize for being the best overall student in the 2016 January ITC Examination.

PATHWAYS COMMITTEE (PC)The Committee continues to analyse and consider the proposals that have been put forward for the different pathways to the CA(Z) qualification with the objective of localization of the examinations and increasing the membership base.

ACCOUNTING PROCEDURE COMMITTEE (APC)As part of ICAZ’s dedication to monitoring, maintaining, and improving quality of reporting, the committee is continuously reviewing the financial statements of companies listed on the Zimbabwe Stock Exchange (ZSE). The results of these reviews are communicated to auditors and preparers. The CPD Committee was notified of areas that have common discrepancies with regards to International Financial Reporting Standards (IFRS), and International Standards on Auditing (ISA) for consideration in populating items on the CPD calendar. The reviews were performed in liaison with the PAAB to avoid any duplication of efforts.

The APC has continued to contribute to the International Accounting Standards Board (IASB) through commenting on Exposure Drafts which are issued from time to time. Some of the Exposure Drafts responded to include:

- Conceptual Framework for Financial Reporting – which outlines proposed changes to the Conceptual Framework;

- Practice Statement: Application of Materiality to Financial Statements – which aims to provide guidance on applying materiality to financial statements; and

- Effective Date of Amendments to IFRS 10 and IAS 28 – which explains the need for the IASB to postpone the effective date of amendments to IFRS 10 and IAS 28

Banking and Finance Sub-CommitteeThe Banking and Finance sub-committee is devoted to continuous monitoring of challenges in the sector and cooperation with the Reserve Bank of Zimbabwe where necessary. One of the key projects it has taken on in the current year is the implementation plan of IFRS 9 which is expected to have a huge impact on reporting in the financial services sector.

Insurance and Pension Funds Sub-Committee.The sub-committee reports to the APC on matters regarding reporting and auditing in relation to Insurance and Pension Funds and the accounting of such in the financial statements of corporates. The committee membership currently comprises ICAZ members, however, the committee is in the process of including representatives from insurance bodies such as IIZ (Insurance Institute of Zimbabwe), ICZ (Insurance Council of Zimbabwe), and IPEC (Insurance and Pensions Commission).

Some of the issues dealt with during the year include: - US Dollar conversion – dealing with the conversion from the Zimbabwean dollar to the United

States dollar since 2009; and - The long form audit report for insurance companies.


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AUDITING AND PROFESSIONAL STANDARDS COMMITTEE (APSC)The Committee is focused mainly on matters relating to any rules and regulations which affect members in public practice, as well as participating and contributing to the International Audit and Assurance Standards Board (IAASB) projects in standard development. The Committee submitted comment letters on Exposure drafts issued by the IAASB, some of which include:

- Improving the structure of the Code of Ethics – which is aimed at refining the Code of Ethics for improved application in practice; and

- Enhancing audit quality in the public interest – which aims to enhance audit quality.

The Committee was also active by providing submissions on the New Companies Act draft and has also supported the implementation of the New Auditors Report.

TAX AND OTHER LEGISLATIONS COMMITTEE (TOLC)The Committee continues to be the agent of the Institute on professional matters that are affected by tax and other legislation.

The Committee coordinates with the Ministry of Finance and other authorities like ZIMRA and the IPEC in a bid to get clarity and rectify any challenges being faced by members and taxpayers. The Committee continues to contribute to policy makers for the national budget.

ZIMRA has been consulting with the Committee with regards to rectifying problems being faced by taxpayers with the new ITF263 e-filing system.

Tax SeminarsIn the current year the Institute conducted one seminar directly focused on tax related issues in collaboration with the CPD Committee.

PUBLIC SECTOR TASK FORCE COMMITTEEThis Committee was setup in the current year, and Mr Bothwell Nyajeka CA(Z) is the chairman. The committee is mainly focused on issues pertaining to preparers and auditors practising in the public sector.

Projects of note being undertaken by the committee include: - Bridging the gap between the Auditor General and the accounting profession, auditors in particular;

and - Adoption of the Public Sector Standards.

INVESTIGATIONS AND DISCIPLINARY COMMITTEEThree new cases were handled by the Investigations and Disciplinary Committees during the year under review. Of these, two cases were concluded by the Disciplinary Committee and one was closed as no prima facie case was established. All cases referred are dealt with according to the ICAZ rules and regulations.

PUBLIC RELATIONS AND MARKETING REPORTThe 2015/2016 period was comprised of activities that encouraged interaction amongst members and significant profiling of the Institute on all forms of media.

ICAZ-Old Mutual Golf DayThe annual charity fund raising golf day was held on the 29th of April 2016 and was a definite success with 22 teams participating on the day. The event raised $8 767.00 which will be donated to charity organisations.


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ICAZ Participated at the Lets Learn-Ngatifunde Career Expo As part of the ICAZ endeavor to promote the Chartered Accountancy profession, the Institute together with the Chartered Accountant Students Society participated at the Lets Learn-Ngatifunde career guidance exhibition conducted at the Harare International Conference Centre from 18 to 19 February 2016. The ICAZ CEO Mr. Matthews Kunaka did a presentation on what it takes to be a Chartered Accountant and how ICAZ supports students to achieve this career.

ICAZ Inaugural Power Walk and RunThe inaugural ICAZ Power Walk/Run was held under the theme, “CA’s Walking for Charity and Wellness”, on 17 November 2015. Over 300 participants made up of members, students and members of the public participated in the event. This was followed by a Zumba session and prize-giving for the winners in the various categories.

ICAZ took the opportunity of this event to donate a motor vehicle, food and clothing to the Rose of Sharon Welfare Organisation and also to raise awareness on healthy living. The motor vehicle was purchased using proceeds from the 2015 ICAZ – Old Mutual Golf day.

Magazine and NewslettersThe Chartered Accountant magazine continued to be published with commendable support from advertisers. The newsletters also updated members on the Institute and other relevant events and activities.

CONTINUING PROFESSIONAL DEVELOPMENTDuring the period under review CPD records were only updated electronically on the ICAZ website which requires members to login to the iMIS system. As a result, some members have been facing challenges as they were used to completing manual forms. ICAZ has sent the login instructions to members who have been facing these challenges as well as assisted them to embrace the system as this will ensure records are easily managed. Warning letters were sent to non-compliant members and the CPD Committee will take further action on these members if need be.

Non-resident members continue to comply with the Institute where they are resident and only complete a declaration form with ICAZ if they have not registered with the Institute where they are resident. The Institute continues to urge members to log onto the system and update their CPD records.

The following is a summary of the CPD seminars held during the period under review together with the names of presenters and facilitators:

ICAZ IPEC SEMINAR (Harare)Date: 16 June 2016Speakers: Manett Mpofu (IPEC Commissionor) Tumai Mafunga (Deloitte Partner) Isiah Mashinya (Group Finance Director, Old Mutual) Josphat Kakwere (IPEC Head of Risk Management)Facilitator: Nhau ChivingiraAttendence: 140

INDIGENISATION, ANTI-MONEY LAUNDERING & LONG FORM AUDIT REPORT SEMINAR (Bulawayo)Date: 27 May 2016 Speakers: Hon. Minister Patrick Zhuwao (Minister of Youth, Indigenisation & Economic Empowerment) Mirirai Chiremba (Director Financial Intelligence Unit, RBZ)Facilitator: Tapiwa Chizana (Deloitte Partner)Attendence: 26

TAX UPDATE (Bulawayo)Date: 17 March 2016 Speakers: Monica Gotora (Deloitte Tax Director) Sifelani Nhliziyo (EY BYO Tax Manager)Facilitator: Tapiwa Chizana (Deloitte Partner)Attendence: 22


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INDIGENISATION, ANTI-MONEY LAUNDERING & LONG FORM AUDIT REPORT SEMINAR (Harare)Date: 16 March 2016Speakers: Hon. Minister Patrick Zhuwao (Minister of Youth, Indigenisation & Economic Empowerment) Anesu Daka (CAA CEO & ICAZ Technical Consultant) Mirirai Chiremba (Director Financial Intelligence Unit, RBZ) Esther Antonio (PWC Partner)Facilitator: Martin Makaya (BDO Partner & ICAZ Junior Vice President)Attendence: 49

IFRS UPDATE (Bulawayo)Date: 26 February 2016Speakers: Tarryn Campbell (EY Senior Manager) Chengetai Mashavave (Deloitte Senior Manager)Facilitator: Tapiwa Chizana (Deloitte Partner)Attendence: 27

TAX UPDATE (Harare)Date: 23 February 2016Speakers: Monica Gotora (Deloitte Tax Director) Maxwell Ngorima (BDO Tax Director) Christina Muzerengi (Grant Thornton Partner) Dr. Godfrey Kanyenze (Economic Analyst)Facilitator: Elisa Dos Santos (Director Platinum Accounting Services)Attendence: 49

IFRS UPDATE: HarareDate: 27January 2016Speakers: Anesu Daka, CAA CEO & ICAZ Technical Consultant Clive Mukondiwa (PWC Partner)Facilitator: Tendai Mutsinze (Nolands Director)Attendence: 68

Analysis of the 2016 National Budget: BulawayoDate: 04 December 2015Speakers: Kgomotso Lekola (MD LGC Capital, SA) Reggie Saruchera (Grant Thornton Managing Partner) Tapiwa Chizana (Deloitte Partner) Tendai Mavima (MD, Tax Management Services)Facilitator: Tarryn Campbell (EY Senior Manager)Attencence: 34

CFO FORUM: Strategies for Financial Sustenance (Harare)Date: 19 November 2015Speakers: Eve Gadzikwa (SAZ Director) Sam Matsekete (CFO Barclays) Patrick Kariwon (HR Consultant) Alban Chirume (CEO ZSE) Brian Njikizana (KPMG Managing Partner) Kgomotso Lekola (MD LGC Capital, SA) Jonas Mushosho (Group CEO Old Mutual)Facilitator: Gewn Muteiwa (Country Head of Finance Banc ABC)Attendence: 66


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Valuations Seminar (Harare)Date: 01October 2015Speakers: Mike Debeer (KPMG Partner) Brian Kashoni (Executive Director, Dawn Property Consultancy) Arnold Marambire (MD, Integrated Properties) Anesu Daka (CAA CEO & ICAZ Technical Consultant) Facilitator: Esther Antonio (PWC Partner)Attendence: 56

CHAPTERS

MASHONALAND DISTRICT SOCIETY OF CHARTERED ACCOUNTANTS (MASH SOCIETY)

During the year 2015-2016 Sevious Mushosho, Finance Director of Distribution Group Africa, remained the chairman of the committee while Sabina Chitehwe, Senior Finance & Corporate Relations Manager, Essar Infrastructure Zimbabwe remained the deputy chairperson.

Winter School in Victoria FallsThe committee is organizing the 2016 Winter School to be held in the resort town of Victoria Falls at the Elephant Hills Resort from the 14th to the 17th of July 2016. The event will be held under the theme: “Taking Ownership of Our Zimbabwe’s Future”. This year’s winter school seeks practical solutions to our economic challenges. To effectively address this, foreign speakers have been invited whose countries have gone through challenges akin to those of Zimbabwe, as well as prominent speakers and presidents of other industrial and professional bodies. Members will be availed opportunities to express themselves during panel discussions, debates and through interactive presentation formats.

The 2016 Winter School program will include a unique opportunity to visit Botswana’s Chobe National Park where delegates will enjoy a boat trip on the Chobe River and a game drive in Chobe National Park. The park is located on the banks of the scenic Chobe River and is home to one of the largest game concentrations in Africa. This excursion is expected to provide members with a diversion from the usual activities carried out by members during the Victoria Falls winter schools.

The committee also conducted various activities during the year which are as follows:

Inaugural Networking Golf DayThe Inaugural Networking Golf day themed ‘Integrity Open’ was successfully held on 11 September 2015, at the Chapman Golf Club. 22 teams of four, drawn from golf experts from the profession and non-member executives from industry and commerce, competed. This was an opportunity for members to reconnect with colleagues and friends as well as reliving old memories and exchanging ideas. It was agreed that the event will now become an annual occurrence.

Christmas Networking DinnerThe Christmas Networking Dinner was held on 27 November at Zimbali in Greendale where a total of 80 delegates attended including 50 new members who were welcomed and inducted at the event. The guest of honor was Ron Mutandagayi, Group Chief Executive Officer of ZB Financial Holdings.

Presentations of certificates were also made to all ICAZ sponsors for 2015 in three categories; platinum, gold and silver.

Book Donation & Career Guidance in MasvingoThe Institute donated Advanced level accounting text books worth US$6 000 to eight secondary schools in Masvingo Province, in a move meant to ease the acute shortage of books. The donation ceremony took place at Victoria High School in Masvingo on 22 January 2016. The books were purchased using proceeds from the ICAZ-Old Mutual Golf day conducted in 2015. Beneficiaries of this worthy donation were: Birivenge High, Chiredzi Government, Nyaningwe High, Munyikwa High, Ndarama High, Victoria High, Maranda High and Chorumba High schools. A career guidance session was also performed immediately after the book donation with the recipients of the donation.


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ZCTA APC GraduationThe committee successfully organised a certificate presentation ceremony for the successful ZCTA and APC candidates on 13 April 2016 at the Harare International Conference Centre. The guest of honor at the ceremony was the Honourable Minister of Higher and Tertiary Education, Professor Jonathan Moyo (MP) while William Mandisodza, the committee secretary of the Mashonaland District Society, was the Master of Ceremony. MATABELELAND DISTRICT SOCIETYThe Matabeleland Society of the Institute of Chartered Accountants of Zimbabwe (the Society) is a small community which adopts an informal approach to its functioning, congruent with the relatively small number and the consequent familiarity of members with one another. The Society has not set up sub-committees.

Two meetings were held in the presidential year beginning June 2015. For one of the two meetings, the Society invited a Bulawayo born USA based investment banker to speak and interact with the members. As has become practice, the Matabeleland Society also participated in a yearend cocktail function which is jointly hosted with the Matabeleland chapter of the Law Society.

ICAZ UAE CHAPTERAugust 2015 will forever remain a special month in the history of the Institute of Chartered Accountants of Zimbabwe (ICAZ). It was during this month that Winter School was held for the first time outside the borders of Zimbabwe, nearly 100 years after the establishment of our prestigious institute. The UAE Chapter had the pleasure of playing host to this historic and ground breaking event.

We dared you at the 2014 Winter School and you obliged. Nearly 400 delegates from 18 countries descended on the shores of Dubai from 6 – 10 August 2015 for what we would like to believe was a truly memorable and unforgettable experience. Indeed, it was a great pleasure to host all the members and their families who attended this conference.

Another memorable event during the extraordinary year was the election of the Chapter’s chairman Bernard Tapera to the ICAZ Council as the first non-resident member. His election has given the Diaspora members a voice in the Council and re-ignited their active participation. At the time of writing this report, a second seat for the Diaspora had been opened for nominations and the jostling for nomination amongst the non-resident members was unprecedented and clear evidence of an increase in Diaspora interest in ICAZ activities.

As part of further efforts to increase Diaspora interaction and participation, the UAE Chapter engaged the UK and South African chapter committees to establish quarterly meetings to discuss matters arising and to brainstorm ideas for recommendation to Council. Two meetings have so far been held with the UK Chapter and work is in progress to incorporate the South African Chapter.

UK CHAPTERThe UK chapter continues to engage UK based members through various networking events and investment focussed discussions. The chapter recognises that the majority of members are keen to get more information on job market, businesses and investment opportunities hence relevant seminars/meetings will be organised in the coming year.

SOUTH AFRICA CHAPTER Major activities undertaken during the presidential year June 2015 to date by ICAZ SA Chapter:

We had two cocktail events in November 2015 for the members.

Plans for the next presidential year: - Charity golf day to benefit disadvantaged students in Zimbabwe - Networking event to benefit recently qualified CA(Z) - Social event - Debate on how members in the diaspora can contribute to decision making in Zimbabwe


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CHARTERED ACCOUNTANTS STUDENTS SOCIETY – CASS

Report by the CASS President

It has been an astounding honour serving as the first female President of this highly esteemed institution of responsive and responsible aspiring Chartered Accountants (CAs). In retrospect, the achievements of the Chartered Accountants Students Society (the Society) have been remarkable and the institution has remained firm in its unwavering commitment to developing and empowering the student accountant and the community.

The theme for the year July 2015 – June 2016 was “Empowering the leaders of tomorrow” and this was exceptionally reflected in the Corporate Social Responsibility committee (CSR) efforts of this year. The focus for the year has been empowerment through education which is representative of our values as a student body. This was achieved in our fundraising efforts where we donated stationery in the form of school textbooks and furniture in the form of desks and chairs to Rose of Sharon Welfare Organisation all to the combined value of US$9 750.

In line with developing the noble initiative that was established in 2015, the ICAZ CASS Scholarship Fund, the Society is constantly seeking ways of developing the learning environment of aspiring Chartered Accountants. The objective of this initiative is to offer educational assistance to academically gifted but disadvantaged children aiming to pursue a Chartered Accountancy qualification. I am delighted to report that the society managed to set aside $1 000 for this worthy cause. To this regard, the society will continue to find ways of raising funds for this cause in an effort to improve the learning environment and making an impact that matters in society.

The society also seeks to develop the student accountant extramurally and as such, CASS successfully organised an Inter-firm soccer league where students from various training offices came together for the love of the games. This culminated in the annual sports day celebrations on Friday, 21 August 2015 at ZB sports club in Vainona. This event united the firms in a friendly, competitive and exciting environment. CASS also donated groceries and stationery to Rose of Sharon Children’s Home at this event.

Now as we draw the curtains on what has been the fantastic 2015/2016 year, I realise that my term in office, and the terms in office of my fellow Officers and Executive members, are coming to an end. Plans are underway for the 2016 CASS seminar which will be held at the Victoria Falls Resort from 30 June to 2 July 2016 at the Kingdom Hotel. The event will most notably be graced by the presence of the Group Chief Executive Officer of CBZ Holdings Limited, one of the biggest local financial institutions, Mr. N. Nyemudzo among other renowned speakers. This will be particularly relevant as we will hold discussions on some of the pertinent economic issues.

The journey of my presidential year has been memorable, I had opportunity to meet some of the most talented individuals of our time. It has been a true honour to have worked with our patron Mr. Martin Makaya, the ICAZ presidium and a talented and dedicated Executive Committee. Words cannot truly express my gratitude for the support and the continual participation of the CASS student body in the initiatives and endeavours of this most venerable organisation. I wish the best to the incoming Executive Committee and I give my heartfelt thanks to each and every one of you for the profound honour and distinct privilege of serving you as your president.

Esteemed ladies and gentlemen. I thank you.

Natasha Dzomba - CASS President


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ANNUALREPORT2016

Council delegates certain functions to standing committees which are appointed for a period of one year at the first Council Meeting in each Presidential year. Each committee has its own terms of reference and reports to the Council. While the various committees have authority to examine particular issues, the Council has the ultimate responsibility as the governing body of the Institute.

CORPORATEGOVERNANCE05

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Council Member MA R. Chimanikire (President) 8/10G. Zvaravanhu (Mrs) (Senior VP) 7/10M. Makaya (Junior VP) 6/10B. Nyajeka 7/10C. Kazembe 7/10 B. Njikizana 9/10F. Kuipa 7/10T. Rwodzi 5/10D. Marange 7/10D. Shinya (Mrs) 7/10D. Gwande 4/10 J. Rickard (Mrs) 4/10C. Mukondiwa 5/10Z. Kumwenda 3/10T. Chikohora 4/10B. Munyurwa (Mrs) 4/10G. Neely 6/10T. Chizana 10/10M. Kunaka 10/10W. Mupanguri 10/10B. Tapera 7/9*T. Mafunga 7/9*B. Mpofu 3/9*

* Elected onto Council in August 2015

Committee Member MA F. Kuipa (Chairperson) 6/7C. Kazembe 4/7D. Shinya 4/7J. Rickard 4/7M.T. Kunaka 5/7

InviteesB. Mabiza (External Auditor) 2/7T. Makunde (External Auditor) 5/7T. Murambinda (Internal Auditor) 3/7

COUNCIL

AUDIT AND FINANCE COMMITTEE

Committee Member MA

R. Chimanikire (President) 10/10G. Zvaravanhu (Mrs.) (Senior VP) 7/10M. Makaya (Junior VP) 9/10M.T Kunaka (CEO) 7/10

EXECUTIVE COMMITTEE

Committee Member MA

T. Rwodzi (Chairperson) 6/6V. Lapham 4/6F. Kuipa 3/6M.T Kunaka 6/6H. Des Fontaine 3/6C. Adamson 4/6M. Chanduru 4/4*

Committee Member MA

A. Mubaiwa (Chairperson) 5/5C. Muzondo 4/5M. Kunaka 5/5C. Maswi 5/5F. Pange 2/5F. Gwiza 4/5E. Ravasingadi 2/5B. Raradza 4/5T. Rwodzi 1/5S. Katsande 4/5T. Zimondi 2/5T. Mafunga 0/5D. Magombedze 4/5E. Mukunyadze 4/5M. Makaya 5/5

Committee Member MA

C. Muzondo (Chairperson) 2/2T. Mafunga 0/2F. Gwiza 1/2E. Makunyadze 0/2D. Magombedze 2/2

Committee Member MA

G. Zvaravanhu (Chairperson) 4/4A. Mubaiwa 4/4S. Ndlovu 1/4T. Rwodzi 1/4M.T Kunaka 4/4

EXAM BOARD

EDUCATION COMMITTEE

ACCREDITATION MONITORING TEAM

PATHWAYS COMMITTEE

CORPORATE GOVERNANCE

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Committee Member MA

S. Hammond (Chairperson) 2/4F. Kembo 2/4M. Dube 2/4J. Mushore 2/4M.T. Kunaka 3/4V. Ndhlovu 1/3

InviteesE. Moyo 3/3C. Banda 2/3

* Number of meetings vary from member to member as members have different cases to look into.

INVESTIGATIONS COMMITTEECommittee Member MA

S. Gwanzura (Chairperson) 5/7S. Ndhlovu 2/7A. Makamure 3/7S. Chitewe 5/7M. Kunaka 6/7A. Chinhara 4/7M. Chigunduru 1/1*

* Joined during the year

Committee Member MA

G. Zvaravanhu (Chairperson) 2/3A. Mubaiwa 3/3T. Rwodzi 2/3M.T. Kunaka 2/3E. Mukunyadze 2/3

Committee Member MA

B. Nyajeka (Chairperson) 1/2C. Chetsanga 1/2C. Wright 2/2D. Mazingaizo 1/2E. Mukunyadze 2/2E. Mungoni 1/2H. Murindagomo 2/2K. Musundire 1/2M. Chitauro 2/2M.T Kunaka 1/2

Committee Member MA

C. Mukondiwa (Chairperson) 8/8B. Matamba 2/8S. Michael 4/8A. Daka 7/8V. Muyambo 4/8M. Kunaka 8/8L. Nyajeka 4/8S. Nyanhongo 4/8C. Shonhiwa 4/8T. Muwandi 5/8T. Campbell 5/8E. Rabvukwa 4/8S. Chitehwe 2/8O. Ndori 7/8T. Mutsinze 2/8E. Dhenhere 6/8P. Mhembere 7/8D. Shinya 4/8C. Nyamuba 4/7*G. Gwatiringa 2/8T. Mukuku 3/5*

*Joined during the year

PUBLIC RELATIONS COMMITTEE

MUTUAL RECOGNITION COMMITTEE

PUBLIC SECTOR TASK FORCE

ACCOUNTING PROCEDURESCOMMITTEE


Committee Member MA

C. Kazembe (Chairperson) 4/4T. Mhuka 2/4S. Mushosho 3/4M. Nyagomo 1/4 K. Eceolaza 2/4M. Kunaka 3/4B. Mbano 2/4S. Mavende 0/4

CONTINUOUS PROFESSIONALDEVELOPMENT

Committee Member MA

D. Gwande (Chairperson) 3/4M.T. Kunaka 4/4M. Makaya 2/4Z. Kumwenda 3/4T. Chikohora 0/4C. Mukondiwa 3/4


HUMAN RESOURCES COMMITTEE

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Committee Member MA D. Marange (Chairperson) 3/5T. Mafunga 3/5M. Kunaka 4/5M. Debeer 4/5A. Mushosho 3/5D. Madhingi 0/5C. Kadzimu 3/5C. Kazembe 4/5E. Bvurere 3/5B. Matamba 0/5F. Manyangadze 2/5E. Antonio 4/5F. Nyagwaya 3/5S. Chitehwe 2/5W. Mkumbuzi 3/5E. Dhenhere 5/5S. Mapindu 2/4*C. Makokove 2/4*


Committee Member MA S. Mushosho (Chairperson) 8/9 S. Chitehwe 4/9H. Nhende 9/9J. Jonga 5/9T. Mudidi 3/9W. Mandisodza 3/9F. Kamota 5/9N. Mkwananzi 0/9M. Kunaka 8/9S. Mambanda 8/9L. Makwasha 3/3*

AUDITING AND PROFESSIONAL STANDARDS COMMITTEE

MASHONALAND DISTRICT SOCIETY

Committee Member MA

H. Des Fontaine (Chairperson) 3/5M. Lopes 5/5E. Wonenyika 5/5L. Taruvinga 2/5J. Chibwe 1/5N. Forsgate 4/5M. Ngorima 3/5A. Makamure 2/5R. Masaire 2/5M. Gotora 2/5T. Mavima 2/5C. Muzerengi 1/5S. Matoushaya 1/5P. Cawood 4/5D. Ngwenya 2/5R. Shayahama 2/5M. Kunaka 4/5E. Shaw 4/5E. Nyandoro 3/5B. Beckley 1/1*V. Ramabhai 3/4*J. Rickard 3/3*

TAX AND OTHER LEGISLATION COMMITTEE

Committee Member MA T. Chizana (Chairperson) S. GwanzuraB. MpofuT. CampbellT. SiwelaT. MuzvidziwaU. MazengezaT. Mkhwananzi

MATABELELAND DISTRICTSOCIETY


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ANNUALREPORT2016

Member MA T. Chikoore (Chairperson) 5/5D. Mpunzi 5/5I. Baptista 4/5T. Nyaunzvi 4/5T. Bwanya 4/5G. Chanetsa-Mazarura 3/4*M. Chawatama 1/1*


Member MA B. Tapera (Chairperson) 11/11G. Nengomasha 11/11N. Denhere 11/11P. Makava 10/11F. Chitauro 11/11B. Zimowa 10/11T. Mukonavanhu 9/11A. Denhere 8/11D. Nyengera 7/11S. Magumise 7/11E. Makava 8/11

Member MA Natasha Dzomba (President) 10/10Tinashe Mushosho (Vice President) 10/10Ben Shava (Treasurer) 10/10Tariro Charamba (Projects Coordinator) 10/10Takudzwa Madzima (Projects Coordinator) 10/10Talent Sanyamahwe (PR Officer) 10/10Tendai Tshalibe (Secretary) 10/10Alvin Manyemba 7/10Albert Chimbo 7/10Yolanda Makombe 10/10Nyasha Kambarami 8/10Nyasha Chokera 10/10Regis Shangwa 8/10Tapiwa Mhlanga 10/10Tanyaradzwa Rwodzi 8/10Russel Dube 8/10Keith Elliot 8/10Khulani Sigogo 8/10Thandeka Mpumela 8/10Farai Chipangura 9/10

Member MA T. Njikizana (Chairperson) 2/3H. Choto 3/3K. Makoni 3/3P. Mawire 2/3R. Mapaure 3/3

UK CHAPTER

UAE CHAPTER

CASS

SA CHAPTER


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PASTPRESIDENTS06 1919 - 2016

P F Derry 1919

F A Collins 1920

R H Everett 1921

R R Olver 1922

A C Raymer 1923

T J Rooney 1924

T J Rooney 1925

R Olver 1926

F A Collins 1927

F A Collins 1928

C J MacNaughtan 1929

R R Olver 1930

W M Brown 1931

F Rixon 1932

C R Musto 1933

A Keay 1934

T E Speight 1935

E P Vernall 1936

E P Vernall 1937

W V Brown 1938

C J MacNaughtan 1939

P F Derry 1940

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ANNUALREPORT2016

W E Scott-Russell 1941

F A Collins 1942

C R Causton 1943

R Williamson 1944

T B Rouse 1945

W J Underwood 1946

W J Underwood 1947

C R Causton 1948

H V Fraser 1949

A Underwood 1950

C R Musto 1951

A J L Lewis 1952

K M Lewis 1953

C R Causton 1954

H B Hone 1955

H B Hone 1956

WB Murray 1957

S G Harsant 1958

L A W Hawkins 1959

B W S O’ Connell 1960

A G H Walker 1961

R G Wurth 1962

C F Buckland 1963

A Underwood 1964

W A Duff 1965

A Underwood 1965

A J S Bosworth 1966

A J L Lewis 1967

M B Davies 1968

C J Voss 1969

B L Sedgewick 1970

R J Hedley 1971

J F Irvine 1972

C L Reed 1973

E E Skeet 1974

E R Bradford 1975

E E Skeet 1975

C M W Mackay 1976

J A Appleby 1977

J W Morley 1978

J C Roome 1979

D J M Vincent 1980

P J Barnacle 1981

T A Taylor 1982

P L Bailey 1983

J A Atkinson 1984

P Walters 1985

D J M Vincent 1986

M D Frudd 1987

N Kudenga 1988

P W Fearnhead 1989

E S Mangoma 1990

T G Hooley 1991

G Gomwe 1992

P Turner 1993

M R Willis 1994

D Benecke 1995

B Ndebele 1996

S J Hammond 1997

N Nyandoro 1998

M J R Dube 1999

C B Thorn 2000

J A Mushore 2001

D J Scott 2002

M T Kunaka 2003

E W Bloch 2004

D S Gwande 2005

V L Ndlovu 2006

T L Gumbo 2007

N P S Zhou 2008

E Chisango (Mrs) 2009

C Malunga 2010

B Njikizana 2011

W Mupanguri 2012

T Rwodzi 2013

B P Nyajeka 2014

R Chimanikire 2015

PAST PRESIDENTS

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FINANCIALSTATEMENTS07for the year ended 31 May 2016

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1

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF THE INSTITUTE OF CHARTERED ACCOUNTANTS ZIMBABWE REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS OPINION We have audited the financial statements of the Institute of Chartered Accountants Zimbabwe (“the Institute”) as set out on pages 36 to 57 which comprise the statement of financial position as at 31 May 2016, and the statement of profit or loss and other comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended, and the notes to the financial statements, including a summary of significant accounting policies. In our opinion, the financial statements present fairly, in all material respects, the financial position of the Institute of Chartered Accountants Zimbabwe as at 31 May 2016, its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS) and in the manner required by the Chartered Accountants Act (Chapter 27:02). BASIS FOR OPINION We conducted our audit in accordance with International Standards on Auditing (ISA). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Institute in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Zimbabwe, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. MATERIAL UNCERTAINTY RELATED TO GOING CONCERN The Institute incurred a net deficit of US$102,731 in the prior year (current year, surplus of US$36,087) which resulted in a negative equity position of US$113,859 as at 31 May 2016 (2015: US$149,946). At the same date the Institute also has a negative liquidity gap (current assets less current liabilities) of US$455,326 (2015: US$532,197). We draw your attention to note 20 where further details on going concern have been disclosed. As stated in Note 20, these events or conditions, along with other matters as set forth in Note 20, indicate that a material uncertainty exists that may cast significant doubt on the Institute’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. The following summarises how the matter was addressed in the audit: We evaluated the Council Members’ going concern assessment by challenging the underlying

data used to prepare the forecast and the key assumptions applied within the Institute’s cash flow forecasts for the next three years, paying particular attention to the 12 months to 31 May 2016;

Our evaluation included an assessment of the viability of the underlying planned fundraising activities to improve operating cash flows, the impact of the International Federation of Accountants (“IFAC”) arrangement and its effect on the timing of the Institute’s cash flows (see Note 20);

We performed audit procedures to identify events subsequent to the date on which the cash flow was prepared that could bear on the reliability of the cash flow forecast; and

We have considered the adequacy of going concern disclosures as set out in Note 20.

We considered the conclusion reached by the Institute to prepare the financial statements on the basis of a going concern, and the resultant disclosures, to be appropriate. 29

2

KEY AUDIT MATTERS We summarise below the matters that had the greatest effect on our audit, our key audit procedures and our findings from those procedures in order that the Institute’s members as a body may better understand the process by which we arrived at our audit opinion. Our findings are the result of procedures undertaken in the context of and solely for the purpose of our audit opinion on the Institute financial statements. In addition to the matter described in the “Material Uncertainty Related to Going Concern” section, we have determined the matters described below to be the key audit matters to be communicated in our report. The key audit matters below relate to the audit of the financial statements.

Key audit matter How our audit addressed the key audit matter

Pending tax cases, provisions and contingent liabilities

The following tax matters affecting the Institute arose in prior year: Discovery of omissions and inaccuracies in

recording of Zimbabwe Revenue Authority (ZIMRA) obligations pertaining to prior periods; and

The Institute was deemed liable to pay VAT. The recognition of these tax obligations in prior year had a significant financial impact on the Institute’s financial performance and position. Additional charges were levied in the current year relating to the same prior periods. The level of judgement required to recognise and accurately measure provisions increases the risk that provisions and contingent liabilities may be inappropriately provided for or inadequately disclosed. The disclosures relating to provisions and contingent tax liabilities are contained in Note 11 and Note 22 respectively.

Our audit procedures focused on: Meeting with the Members of the Council

of the Institute and having direct discussions regarding material cases;

Examining the correspondence between the Council Members and the Revenue Authority and discussing the status of negotiations with them; and

Assessing the impact of the communications in the context of the adequacy of provisions recognised and appropriateness of disclosures in the financial statements.

We found the recognition, measurement and disclosure of provisions and contingent liabilities to be reasonable in the circumstances.

INDEPENDENT AUDITOR’S REPORT

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3


Allowance for impairment on members’ subscriptions receivable balances

As reflected in note 8, the Institute had US$866,864 in membership subscriptions receivable as at 31 May 2016. Balances amounting to US$321,842 were past due but not impaired. The decision supporting that position was based on the following judgements: There were no significant changes in the credit

quality of the respective accounts, from the date the subscription was recognised to reporting date, based on review of the past payment history of the members; and

Future cash flows are expected on these balances based on historic loss experience and steps undertaken by the Council Members to recover the outstanding balances.

As disclosed in note 4.1(b), the key assumptions applied in the determination of the allowance for impairment losses on members’ subscriptions comprise the following:

An average recovery rate determined based on historical loss experience is applied on current year members’ subscriptions receivable; and

100% impairment allowance on balances receivable from members listed for deregistration as a result of noncompliance with the Institute’s bylaws.

This area is therefore considered a key audit matter.

We reviewed members’ payment history to confirm adherence to the terms and conditions of membership.

We assessed and challenged the assumptions made by Council Members on the recoverability of selected accounts receivable. This involved assessment of the members’ ability to meet the obligations over time.

We tested a selection of accounts receivable through verification of subsequent receipts.

We challenged the appropriateness of Council Members’ key assumptions used in the calculations for impairment allowance on members’ subscriptions. This involved assessing key assumptions for appropriateness in the context of external data and prior experience.

We found that the Council Members applied sensible judgements in assessing the adequacy of the allowance for impairment losses on members’ subscriptions.


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4


Revenue recognition

Due to a high risk of members defaulting in paying subscriptions and the current economic environment characterised by liquidity challenges, revenue recognition is an area requiring Council Members to make significant judgements whether subscriptions billed represent consideration receivable. Revenue may be recognised on subscriptions that might not be recoverable. As a result of the significance of the Institute’s revenue balance, and the timing of revenue recognition, this was considered to be a key audit matter. The revenue recognition policy is disclosed in note 2.14, and revenue recognised is disclosed in Note 12.

We updated our understanding of the revenue recognition process, performed walkthroughs of the revenue classes of transactions and evaluated the operation of internal controls set in this area.

Recalculating the revenue using data analytical methods.

We challenged Council Members’ assumptions in respect of cash flow estimates, focusing on the timing and assessed whether the revenue recognition policies adopted were in compliance with IFRS. We evaluated whether the revenue recognition model is working as intended.

We evaluated whether the assumptions used by the Council Members regarding probability of the recovery of members’ subscriptions billed were comparable with trends established in the past, and were appropriate in the circumstances.

We found the revenue recognition criteria for the revenue streams to be in accordance with the applicable accounting standard and to be fairly accurate. We therefore concluded that measurement of revenue is in accordance with IFRS requirements.

OTHER INFORMATION The Council Members are responsible for the other information. The other information comprises the Message from the President and Report of the Council, which we obtained prior to the date of this auditors’ report. The other information does not include the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance or conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We confirm that we have not identified any such inconsistencies or misleading statements.


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5

RESPONSIBILITIES OF THE COUNCIL MEMBERS FOR THE FINANCIAL STATEMENTS The Council Members are responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards and in the manner required by the Chartered Accountants Act (Chapter 27:02), and for such internal control as the Council Members determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Council Members are responsible for assessing the Institute’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Council Members either intend to liquidate the Institute or to cease operations, or have no realistic alternative but to do so. AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial statements, whether due to

fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Institute’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Council Members.

Conclude on the appropriateness of the Council Members’ use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Institute’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Institute to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.


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6

We communicate with the Council Members regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the Council Members with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the Council Members, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. The engagement partner on the audit resulting in this independent auditor’s report is Brian Mabiza. DELOITTE & TOUCHE Per Brian Mabiza Partner Registered Auditor 05 July 2016


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as at 31 May 2016Statement of Financial Position

R. CHIMANIKIRE (PRESIDENT)

Date: 5 July 2016

M.T KUNAKA (CHIEF EXECUTIVE OFFICER)

2016 2015

Note US$ US$

ASSETS

Non-current assets

Property and equipment 5 259,361 285,177

Intangible assets 6 70,720 90,294

330,081 375,471

Current assets

Inventories 7 6,485 -

Accounts receivable 8 298,108 584,315

Financial assets at fair value through profit or loss 9 1,159 1,655

Cash and cash equivalents 10 195,258 292,667

501,010 878,637

Total assets 831,091 1,254,108

RESERVES AND LIABILITIES

Reserves

Accumulated deficit (113,859) (149,946)

Current liabilities

Accounts payable 11 944,950 1,404,054

Total reserves and liabilities 831,091 1,254,108

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ANNUALREPORT2016

for the year ended 31 May 2016

Statement of Profit or Loss and Other Comprehensive Income

2016 2015Note US$ US$

Revenue 12 1,771,453 1,300,674

Administrative expenses 13 (2,016,563) (1,667,390)

Other income 15 302,829 266,063

Operating surplus / (deficit) 57,719 (100,653)

Finance income 16 932 3,419

Finance costs 16 (22,564) (5,497)

Surplus / (deficit) for the year 36,087 (102,731)

Other comprehensive income for the year - -

Total comprehensive surplus/(deficit) for the year 36,087 (102,731)

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for the year ended 31 May 2016Statement of Changes in Reserves

AccumulatedFundUS$

Accumulated deficit at 1 June 2014 (47,215)

Total comprehensive deficit for the year (102,731)

Accumulated deficit at 31 May 2015 (149,946)

Total comprehensive surplus for the year 36,087

Accumulated deficit at 31 May 2016 (113,859)

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For the year ended 31 May 2016Statement of Cash Flows

2016 2015US$ US$

Cash flows from operating activitiesSurplus / (deficit) for the year 36,087 (102,731)

Adjustments for:Depreciation of property and equipment 42,360 42,813 Amortisation of intangible assets 19,574 26,475 Loss on disposal of property and equipment 1,150 10,474 Net finance income (912) (2,100)Fair value adjustment in financial assets at fair value through profit or loss 496 -

98,755 (25,069)

Changes in working capital:(Increase) / decrease in inventories (6,485) 895 Decrease / (increase) in accounts receivable 286,207 (381,283)(Decrease) / increase in accounts payable (459,104) 581,982

Cash (utilised in) / generated from operations (80,627) 176,525

Finance costs (20) (1,319)

Net cash (utilised in) / generated from operating activities (80,647) 175,206

Cash flows from investing activitiesAcquisition of property and equipment (17,694) (17,387)Acquisition of intangible assets - (4,995)Finance income 932 3,419 Net cash used in investing activities (16,762) (18,963)

Cash flows from financing activitiesRepayments of borrowings - (7,445)

Net (decrease) / increase in cash and cash equivalents (97,409) 148,798

Cash and cash equivalents at the beginning of the year 292,667 143,869

Cash and cash equivalents at the end of the year 195,258 292,667

38

ANNUALREPORT2016

for the year ended 31 May 2016

Notes to the Financial Statements

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ANNUALREPORT2016

1 GENERAL INFORMATION

The Institute of Chartered Accountants of Zimbabwe (“the Institute”) is a statutory body incorporated under the Chartered Accountants Act (Chapter 27:02). It is the foremost accountancy body in the country and is a member body of the International Federation of Accountants (‘IFAC’) and the Pan African Federation of Accountants (‘ PAFA’).

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below.

2.1 Basis of preparation and presentationThe financial statements have been prepared in accordance with International Financial Reporting Standards, (“IFRS”).

The financial statements are based on statutory records that are maintained under the historical cost convention.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Institute’s accounting policies. Changes in assumptions may have a significant impact on the financial statements in the period the assumptions changed. Management believes that the underlying assumptions are appropriate. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 4 to the financial statements.

2.2 Application of new and revised International Financial Reporting Standards (IFRSs)

2.2.1 Accounting standards and interpretations adopted impacting the annual financial statements

The Institute did not adopt any new or revised accounting standards or interpretations in the current year that would have had an impact on the amounts or disclosures reported in these financial statements.

• IAS 19 Employee Benefits-clarifies how an entity should account for contributions made by employees or third parties to the defined benefit plans (applicable to annual periods beginning on or after 1 July 2014). Annual Improvements to IFRSs 2010-2012 Cycle

• IFRS 2 Share-based Payment – clarifies the definition of vesting condition and market condition. It also adds definitions for ‘performance condition’ and ‘service condition’ which were previously included as part of the definition of ‘vesting condition’. (effective for annual periods beginning on or after 1 July 2014).

• IFRS 3 Business Combinations – clarifies that contingent consideration should be measured at fair value at each reporting date, irrespective of whether or not the contingent consideration falls within the scope of IFRS 9 or IAS 39. Changes in fair value (other than measurement period adjustments as defined in IFRS 3) should be recognised in profit and loss. (effective for annual periods beginning on or after 1 July 2014).

• IFRS 8 Operating Segments – requires disclosure of the judgements made by management in applying the aggregation criteria to operating segments, clarify reconciliations of segment assets only required if segment assets are reported regularly. (effective for annual periods beginning on or after 1 July 2014).

• IFRS 13 Fair Value Measurement – clarifies that the issuance of IFRS 13 and consequential amendments to IAS 39 and IFRS 9 did not remove the ability to measure short- term receivables and payables with no stated interest rate at their invoice amounts without discounting, if the effect of discounting is immaterial. (effective for annual periods beginning on or after 1 July 2014).

• IAS 16 and 38 Property Plant and Equipment and Intangible assets – clarify that the gross carrying amount is adjusted in a manner consistent with the revaluation of the carrying amount of the asset and that accumulated depreciation/ amortisation is the difference between the gross carrying amount and the carrying amount after taking into account accumulated impairment losses. (effective for annual periods beginning on or after 1 July 2014).

• IAS 24 Related Parties - clarifies that a management entity providing key management personnel services to the reporting entity or to the parent of the reporting entity is a related party of the reporting entity. (effective for annual periods beginning on or after 1 July 2014).

for the year ended 31 May 2016Notes to the Financial Statements

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2.2.2 New and revised IFRSs mandatorily effective at the end of the reporting period with no material effect on the reported amounts and disclosures in the current or prior year

The following new or revised IFRSs were mandatorily effective and adopted by the Institute as at the end of the reporting period, but did not have a material effect on the current or previously reported financial performance or financial position.

Annual Improvements to IFRSs 2011-2013 Cycle

• IFRS 1 First Time Adoption of IFRS- clarifies which versions of IFRS can be used on initial adoption (Amends basis for conclusion only). (Effective for annual periods beginning on or after 1 July 2014).

• IFRS 3 Business Combinations – clarifies that IFRS 3 does not apply to the accounting for the formation of joint arrangement in the financial statements of the joint arrangement itself). (Effective for annual periods beginning on or after 1 July 2014).

• IFRS 13 Fair Value Measurement – clarifies that the scope of the portfolio exception for measuring the fair value of a group of financial assets and financial liabilities on a net basis includes all contracts that are within the scope of, and accounted for in accordance with, IAS 39, or,

• IAS 40 Investment Property - clarifies the interrelationship between IFRS 3 and IAS 40 when classifying property as investment property or owner-occupied property). (Effective for annual periods beginning on or after 1 July 2014).

2.2.3 Impact of standards and interpretations in issue but not yet effective

At the reporting date, the following new and/or revised accounting standards and interpretations were in issue but not yet effective:

• IFRS 9 Financial Instruments-introduces new requirements for the classification and measurement of financial instruments. (Effective for annual periods beginning on or after 1 January 2018 with earlier application permitted).

• IFRS 14 Regulatory Deferral Accounts- specifies the accounting for regulatory deferral account balances that arise from rate-regulated activities. (Effective for first annual IFRS financial statements with annual periods beginning on or after 1 January 2016).

• IFRS 15-Revenue from Contracts with Customers – establishes a single comprehensive model for entities to use on the accounting for revenue arising from contracts with customers. It will supercede the current revenue recognition guidance including IAS18 Revenue. (Effective for annual periods beginning on or after 1 January 2018 with earlier adoption being permitted).

• IFRS 11 Accounting for Acquisitions of Interest in Joint Operations- provide guidance on how to account for the acquisition of an interest in a joint operation in which the activities constitute a business as defined in IFRS 3 Business Combinations. (Effective for annual periods beginning on or after 1 January 2016).

• Amendments to IAS 1 Presentation of Financial Statements- the amendments were a response to comments on the difficulties in applying the concept of materiality in practice as the wording of some of the requirements in IAS 1 had in some cases been read to prevent the use of judgement. (Effective for annual periods beginning on or after 1 January 2016).

• IAS 16 and IAS 38 - Clarification of Acceptable Methods of Depreciation and Amortisation - clarify that depreciation method that is based on revenue that is generated by an activity that includes the use of an asset is not appropriate for property plant and equipment and intangible assets, subject to exception in limited circumstances, on intangible assets. (Effective for annual periods beginning on or after 1 January 2016).

• IAS 16 and IAS 41 – Amendments bringing bearer plants into the scope of IAS16 (effective annual period bringing on or after 1 January 2016)

• IAS 27 Equity Method in Separate Financial Statements -the amendments allow an entity to optionally account for investments in subsidiaries, joint ventures and associates in its separate financial statements, at cost; in accordance with IAS39 or IFRS9 and using the equity method. (Effective for annual periods beginning on or after 1 January 2016.

• IFRS 10, IFRS 12, and IAS 28 Investment Entities: Applying the Consolidation Exception – clarifies issues that have arisen in the context of applying the consolidation exception for investment entities. (Effective for annual periods beginning on or after 1 January 2016).

for the year ended 31 May 2016Notes to the Financial Statements (cont...)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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• IFRS 16 Leases– addresses issues raised by users on the need to record operating lease assets and related depreciation and interest expense. Previously, the operating lease contracts were recorded off balance sheet, with the lease payments being straight-lined over the lease period. (Effective for annual periods beginning on or after 1 January 2019).

• Revision on Investment Entities: Applying the Consolidation Exception, IFRS 10, IFRS 12, and IAS28 clarifies specific issues raised by users in applying the consolidation exceptions (Effective for annual periods beginning on or after 1 January 2016).

• Revision on IAS 12 Income Taxes- clarifies issues to do with deferred tax arising from debt instruments measured at fair value for accounting at cost for tax purposes, estimates for future taxable losses and utilisation of future asset tax utilisation (Effective for annual periods beginning on or after 1 January 2017).

Annual Improvements 2012-2014 Cycle (Effective for annual periods beginning on or after 1 January 2016)

• IFRS 5 Non-Current Assets Held for Sale – Adds specific guidance in IFRS 5 for cases in which an entity reclassifies an asset from held for sale to held for distribution or vice versa and cases in which held-for-distribution accounting is discontinued.

• IFRS 7 Financial Instruments Disclosure – Additional guidance to clarify whether a servicing contract is continuing involvement in a transferred asset, and clarification on offsetting disclosures in condensed interim financial statements.

• IAS 34 Interim Financial Reporting – Clarify the meaning of ‘elsewhere in the interim report’ and require a cross-reference.

• IFRS 9 Financial Instruments - Clarify that the high quality corporate bond used in estimating the discount note for post employment benefits should be denominated in the same currency as the benefits to be paid.

2.3 Foreign Currencies

2.3.1 Functional and presentation currencyItems included in the financial statements are measured using the currency of the primary economic environment in which the Institute operates (‘the functional currency’). The financial statements are presented in the United States Dollar (“US$”), which is the Institute’s presentation currency.

2.3.2 Transactions and balancesForeign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of profit or loss or other comprehensive income.

2.4 Property and EquipmentProperty and equipment are stated at historical cost, less subsequent depreciation and impairment. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Institute and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of profit or loss and other comprehensive income during the financial period in which they are incurred.

Land is not depreciated. Depreciation on other assets is calculated on the straight line basis to allocate the cost of each asset to its residual value over its estimated useful life as follows:

Buildings 40 years Motor vehicles 5 years Furniture and fittings 10 years Computer equipment 5 years

The assets’ residual values and useful lives are reviewed and adjusted, if appropriate, at each reporting date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

for the year ended 31 May 2016Notes to the Financial Statements (cont..)

2.2.3 Impact of standards and interpretations in issue but not yet effective (cont...)


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Gains and losses on disposal of property and equipment are determined by comparing proceeds with carrying amount. These are included in the statement of profit or loss and other comprehensive income.

2.5 Intangible assetsIntangible assets comprise externally acquired computer software and are stated at historical cost, less subsequent amortisation and impairment.

Computer software costs recognised as assets are amortised over their estimated useful lives, ranging from 2 to 8 years.

2.6 Impairment of non-financial assetsAssets that have indefinite useful lives, for example land, are not subject to depreciation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment is recognised for the amount by which the asset’s carrying amount exceeds the recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

2.7 Financial assetsThe Institute classifies its financial assets in the following categories: loans and receivables, and at fair value through profit or loss. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition and re-evaluates this designation at every reporting date. Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Assets in this category are classified as current assets if expected to be settled within 12 months; otherwise, they are classified as non-current.

Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the reporting date. These are classified as non-current assets. Loans and receivables are classified as “accounts receivable’’ in the statement of financial position.

2.7.1 Recognition and measurementRegular purchases and sales of financial assets are recognised on the trade-date, that is the date on which the Institute commits to purchase or sell the asset. Financial instruments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets are derecognised when the right to receive cash flows from the investments have expired or have been transferred and the Institute has transferred substantially all risks and rewards of ownership. Loans and receivables are carried at amortised cost using the effective interest rate method.

Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are presented in the statement of comprehensive income in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in the statement of profit or loss and other comprehensive income as part of other income when the Institute’s right to receive payments is established.

2.7.2 DerecognitionA financial asset is derecognised when the Institute loses control over the contractual rights that comprise the asset. A financial liability is derecognised when it is paid. 2.7.3 Offsetting financial instruments Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.



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2.7.4 Impairment of financial assets The Institute assesses at each reporting date whether there is objective evidence that an asset or group of financial assets is impaired. A financial asset is impaired if, and only if, there is objective evidence of impairment as a result of one or more loss events that occurred after initial recognition of the asset and prior to the reporting date (loss event) and that loss event has had an impact on the future cash flows of the financial asset that can be reliably estimated. Objective evidence that a financial asset or group of financial assets is impaired includes observable data that comes to the attention of the Institute about the following loss events:

a. Significant financial difficulty of the issuer or obligor;b. A breach of contract such as a default or delinquency in interest or principal payments; c. It becomes evident that the borrower will enter bankruptcy or financial re-organisation;d. The disappearance of an active market for that financial asset because of financial difficulty; ande. Observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of

financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio, including: i. adverse changes in the payment status of borrowers in the portfolio; andii. national or local economic conditions that correlate with defaults on the assets in the portfolio.

The Institute first assesses whether objective evidence of impairment exists.

The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The asset’s carrying amount is reduced and the amount of the loss is recognised in the statement of profit or loss and other comprehensive income. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment is the current effective interest rate determined under the contract. As a practical expedient, the Institute may measure impairment on the basis of an instrument’s fair value using an observable market price.

2.8 InventoriesInventories are stated at the lower of cost or net realisable value. Cost is determined using the weighted average cost method. “Net realizable value is the estimated selling price less estimated selling expenses.

2.9 Cash and cash equivalentsIn the statement of cash flows, cash and cash equivalents comprise:

• cash in hand; • deposits held at call and short notice; and • balances with banks.

Cash and cash equivalents only include items held for the purpose of meeting short-term cash commitments rather than for investing or other purposes. Cash and cash equivalents have a maturity of less than three months. Cash and cash equivalents are carried at cost which, due to their short term nature, approximates fair value.

2.10 Accounts receivableAccounts receivable are amounts due from members’ subscriptions, students’ fees and other services provided for by the Institute. If collection is expected in one year or less (or in the normal operating cycle or if longer), they are classified as current assets. If not, they are presented as non-current assets.

Accounts receivable are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.

2.11 BorrowingsBorrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the statement of profit or loss and other comprehensive income over the period of the borrowings using the effective interest rate method.



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2.11 Borrowings (continued)Borrowings are classified as current liabilities unless the Institute has an unconditional right to defer settlement of the liability for at least 12 months after the statement of financial position date.

2.12 ProvisionsProvisions are recognised when the Institute has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount can be reliably estimated. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.

2.13 Employee benefits

2.13.1 Pension obligationsThe Institute participates in a defined contribution plan. A defined contribution plan is a plan under which the Institute pays fixed contributions into a separate entity. The contributions are recognised as employee benefit expenses when due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available. The Institute has no legal or constructive obligation to pay further contributions if the fund does not hold sufficient amounts to pay all employees the benefits relating to employee service in the current and prior periods.

The Institute and employees also contribute to the National Social Security Authority Scheme (NSSA). This is a social security scheme which was promulgated under the National Social Security Act. The Institute’s obligations under the scheme are limited to specific contributions as legislated from time to time.

2.13.2 Termination benefitsTermination benefits are payable when the Institute terminates employment before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Institute recognises termination benefits when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without the possibility of withdrawal, or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the reporting date are discounted to their present value.

2.14 Revenue recognitionRevenue is measured at the fair value of the consideration received or receivable for the provision of services in the ordinary course of the Institute’s activities. The Institute recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Institute and specific criteria have been met for each of the Institute’s activity as described below:

2.14.1 Subscriptions Revenue from subscriptions is recognised on an accrual basis.

2.14.2 Education programmes Net income, comprising student fees received less direct expenses incurred, is recognised at the completion of the academic year to which it relates. At reporting date, fees received net of expenses incurred, in respect of the current academic year, are included in receivables or payables. 2.14.3 Sales of services Sales of services are recognised in the period in which the services are rendered, by reference to completion of the specific transactions assessed on the basis of actual services provided.



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2.14.4 Interest income Interest income is recognised on a time proportionate basis using the effective interest method. When a receivable is impaired, the Institute reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loans is recognised using the original effective interest rate.

2.15 Fair value measurements and valuation processSome of the Institute’s assets are measured at fair value for financial reporting purposes. In estimating the fair value of an asset, the Institute makes use of market observable data to the extent that it is available. Where this is not available, the Institute uses third party qualified valuers to perform the valuation.

3. FINANCIAL RISK MANAGEMENT

3.1 Financial risk managementThe Institute’s activities exposes it to a variety of financial risks, including the effect of changes in foreign currency exchange rates and interest rates. The Institute’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Institute. Risk management is carried out by management under policies approved by the Council. Management identify and evaluate financial risks such as foreign exchange risk, interest risk, credit risk and investment of excess liquidity.

a) Market risk i. Foreign exchange risk The Institute is exposed to foreign exchange risk arising from various currency exposures primarily with respect to the South African Rand (‘ZAR’). Management aims to manage the Institute’s foreign exchange risk against the functional currency. Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the Institute’s functional currency. At 31 May 2016 the Institute had the following exposures to foreign currencies: • Bank balances –ZAR 1 325 632, carried at US$ 83 954 • Receivables –ZAR 613 467, carried at US$ 38 852 At 31 May 2016 if the US$ had weakened/strengthened by 10% against the South African rand with all other variables constant, the effect on profit for the year would have been US$ 11 107 higher/lower, mainly as a result of foreign exchange gains/losses on translation of the rand denominated bank balances and receivables. ii. Price risk The Institute is exposed to price risks arising from equity investments. Listed investments with a fair value of US$ 1 159 are exposed to price risk but this exposure is within the Institute’s risk appetite. iii. Cash flow and fair value interest rate risk The Institute’s interest rate risk arises from borrowings. Borrowings issued at variable rates expose the Institute to cash flow interest rate risk which is partially offset by cash held at variable interest rates. Borrowings issued at fixed rates expose the Institute to fair value interest rate risk. As the Institute’s interest bearing assets do not generate significant amounts of interest, changes in the market interest rates do not have a significant direct effect on the Institute’s income. Accounts receivable and payable are interest free and have settlement dates within one year.



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b) Credit riskCredit risk is the risk that one party to a financial instrument will cause financial loss to the other party by failing to discharge a contract. Credit risk arises from financial instruments and deposits with banks and financial institutions, as well as credit exposures to members, including outstanding receivables and committed transactions. For banks and financial institutions, only well-established institutions with sound financial positions are used. Credit exposures are closely monitored for indications of impairment. The Institute’s exposure to credit risk by class of financial asset is as follows:

c) Liquidity risk2016 2015US$ US$

Accounts receivable 298,108 584,315 Cash and cash equivalents 195,258 292,667

493,366 876,982

The fair value of cash and cash equivalents and accounts receivable as at 31 May 2016 approximates the carrying amount.

Analysis by credit quality of financial assets is as follows:

Neither past due nor impaired- Cash and cash equivalents 195,258 292,667

Past due and not impaired-Accounts receivable 293,207 124,948

Past due and impaired-Accounts receivable 545,022 169,738


3. FINANCIAL RISK MANAGEMENT (CONTINUED)

3.1 Financial risk management (continued)

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On demand From From

and Less 1 to 6 6 to 12 More Than

Than 1 Month Months Months 12 months Total

US$ US$ US$ US$ US$

At 31 May 2016

Assets

Accounts receivable (excluding prepayments) 293,207 - - - 293,207

Financial assets at fair value through profit or loss 1,159 - - 1,159

Cash and cash equivalents 195,258 - - - 195,258

Total assets 489,624 - 489,624

Liabilities

Accounts payable 184,057 680,576 80,317 - 944,950

Total liabilities 184,057 680,576 80,317 - 944,950

Liquidity gap 305,567 (680,576) (80,317) - (455,326)

At 31 May 2015

Assets

Accounts receivable (excluding prepayments) 124,948 452,587 - - 577,535

Financial assets at fair value through profit or loss 1,655 - - - 1,655

Cash and cash equivalents 50,450 242,217 - - 292,667

Total assets 177,053 694,804 - - 871,857

Liabilities

Accounts payable 136,390 1,237,818 29,846 - 1,404,054

Total liabilities 136,390 1,237,818 29,846 - 1,404,054

Liquidity gap 40,663 (543,014) (29,846) - (532,197)

The liquidity gap will be covered by revenue from member subscriptions and education income.

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities. The Institute manages liquidity risk by continuously monitoring forecast and actual cash flows. Liquidity risk is the risk that the Institute may fail to meet its payment obligations when they fall due, the consequences of which may be the failure to meet the obligations to creditors. The Institute identifies this risk through periodic liquidity gap analysis and the maturity profile of assets and liabilities. Where major gaps appear, action is taken in advance to close or minimise the gaps.

A maturity analysis of the Institute’s financial instruments as at 31 May 2016 is as follows:

d) Financial instruments by category


3.1 Financial risk management (continued)

c) Liquidity risk (continued)

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2016 2015US$ US$

Assets as per statement of financial positionLoans and receivables

Accounts receivable (excluding prepayments) 293,207 577,535 Cash and cash equivalents 195,258 292,667

488,465 870,202

Assets at fair value through profit or lossFinancial assets at fair value through profit or loss 1,159 1,655

Total 489,624 871,857

Liabilities as per statement of financial positionOther financial liabilities at amortised cost

Accounts payable 944,950 1,404,054

3.2 Capital risk management

The Institute’s objectives when managing capital (reserves) are to safeguard its ability to continue as a going concern in order to continue to provide benefits for members and other stakeholders. In order to maintain or adjust the capital structure, the Institute may adjust the amount of borrowings or investments it holds from time to time.

3.3 Fair value estimationThe carrying value of accounts receivable and payables are assumed to approximate their fair values. The fair value of financial instruments is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Institute for similar financial instruments.

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

4.1 Critical accounting estimates and assumptionsThe Institute makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are outlined below. a) Useful lives of property and equipmentThe Institute’s management determines the estimated useful lives and related depreciation charges for its property and equipment. This estimate is based on projected lifecycles for these assets. Management will increase the depreciation charge where useful lives are less than previously estimated lives, or it will write off or write down technically obsolete or non-strategic assets that have been sold.

b) Impairment on accounts receivableThe key assumptions applied in the determination of the allowance for impairment losses on members’ subscriptions comprise the following:

• An average recovery rate determined based on historical loss experience is applied on current year members’ subscriptions receivable; and

• 100% impairment allowance on balances receivable from members listed for deregistration as a result of noncompliance with the Institute’s by-laws.


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5 PROPERTY AND EQUIPMENT

Land and Motor Computer Furniturebuildings vehicles equipment and fittings Total

US$ US$ US$ US$ US$

As at year ended 31 May 2016Opening net book amount 174,424 12,529 71,758 26,466 285,177 Additions - - 17,024 670 17,694 Disposals - - (1,048) (102) (1,150)Depreciation charge (4,003) (3,759) (30,096) (4,502) (42,360)

Closing net book amount 170,421 8,770 57,638 22,532 259,361

At 31 May 2016Cost 200,100 61,300 131,572 45,655 438,628 Accumulated depreciation (29,679) (52,530) (73,934) (23,123) (179,266)

Net book amount 170,421 8,770 57,638 22,532 259,361

As at year ended 31 May 2015Opening net book amount 178,427 41,373 75,996 25,281 321,077 Additions - - 12,123 5,264 17,387 Disposals - (10,474) - - (10,474)Depreciation charge (4,003) (18,370) (16,361) (4,079) (42,813)

Closing net book amount 174,424 12,529 71,758 26,466 285,177

At 31 May 2015Cost 200,100 61,300 118,408 45,093 424,901 Accumulated depreciation (25,676) (48,771) (46,650) (18,627) (139,724)

Net book amount 174,424 12,529 71,758 26,466 285,177

Depreciation expense of US$ 42,360. (2015: US$42,813) has been charged in “administrative expenses” in the statement of profit or loss and other comprehensive income.


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6 INTANGIBLE ASSETS2016 2015

US$ US$Computer softwareOpening net book amount 90,294 111,774 Additions - 4,995 Amortisation (19,574) (26,475)Closing net book amount 70,720 90,294

Cost 139,389 139,389 Accumulated amortisation (68,669) (49,095)Net book amount 70,720 90,294

Amortisation expense of US$19,574 (2015: US$26 475) is included in “administrative expenses” in the statement of profit or loss and other comprehensive income.

7 INVENTORIESIFRS books and branded material 6,485 -

6,485 -


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8 ACCOUNTS RECEIVABLE2016 2015

US$ US$

Member subscriptions 866,864 291,591 Less: allowance for impairment of member subscriptions (545,022) (169,738)Member subscriptions - net 321,842 121,853

Winter School - 452,587 Prepayments 4,901 6,780 Receivable from member firms 3,226 3,226 Staff debtors 11,913 10,071

20,040 472,664 Less: Unallocated deposits (43,774) (10,202)Other receivables - net (23,734) 462,462 Total 298,108 584,315

The carrying amount of the accounts receivable approximates their fair value.As at 31 May 2016, member subscriptions receivable of US$321,842 (2015: US$121,853) were past due but not impaired

The ageing of these receivables is as follows:Greater than 90 days 293,207 124,948

As at 31 May 2016, member subscriptions of US$545,022 (2014: US$169,738) were past due and impaired.

Movements on the provision for impairment are as follows :At beginning of year 169,738 247,212 Provision for receivables impairment 375,284 53,595 Receivables written off during the year as uncollectible - (131,069)At end of year 545,022 169,738

9 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSSOpening balance 1,655 1,655 Fair value adjustment (496) -Closing balance 1,159 1,655

Listed securities comprise equities held through the Institute’s asset managers and the fair value is based on their current bid prices on the Zimbabwe Stock Exchange.


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10 CASH AND CASH EQUIVALENTS

2016 2015US$ US$

Cash at bank and on hand 195,258 242,217 Short- term deposits - 50,450

195,258 292,667

11 ACCOUNTS PAYABLEAmount due to:Public Accountants and Auditors Board 46,524 74,199 Accounting professional training 54,627 108,272 Member subscriptions paid in advance 93,622 49,979 Winter School 25,794 490,835 Social security costs 17,658 24,372 Accrued expenses 88,487 13,564 Leave pay 33,793 29,846 Deferred revenue 78,330 117,466 Other payables 77,914 24,255 Taxation accrual 428,201 471,266

944,950 1,404,054


12 REVENUE

Membership subscriptions and levies 1,232,360 825,407 ZCTA, UNISA and QE examination commissions 539,093 475,267

1,771,453 1,300,674

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13 ADMINISTRATIVE EXPENSES

2016 2015US$ US$

Audit fee - UNISA certification 5,950 5,751 Legal fees 4,164 4,539 Computer costs 43,740 50,960 Depreciation and amortisation 61,934 69,288 Loss on disposal of property and equipment 1,150 10,474 Continuing professional development costs 23,250 17,456 Consulting fees 71,984 32,106 Motor vehicle expenses 14,524 15,991 Travelling, conferences and seminars 37,519 95,614 Subscriptions 44,870 5,000 Telephone and postage 33,376 44,395 Assessor training costs 8,404 8,325 Employee benefit expenses (note 14) 620,745 635,624 Provision for impairment of receivables 375,284 53,595 Public Accountants and Auditors Board levies 122,380 86,106 Education costs 117,213 205,424 Repairs and maintenance 13,118 19,793 IFRS handbooks 16,010 14,679 Printing and stationery 15,092 9,938 Canteen and housekeeping expenses 24,578 21,925 Graduation costs 16,930 13,263 Bank charges 23,565 22,819 General expenses 19,025 24,227 Taxation accrual 154,123 100,729 Public relations costs 107,419 67,052 Occupational costs 14,916 13,969 Other costs 25,300 15,348

2,016,563 1,667,390


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14 EMPLOYEE BENEFIT EXPENSES

2016 2015US$ US$

Wages and salaries 559,842 576,476 Pension costs- NSSA 15,257 11,256 - Old Mutual Life Assurance 45,646 47,892

620,745 635,624

15 OTHER INCOME

Bad debts recovered 1,684 - Public relations 50,026 27,688 Photocopying income 17,517 20,029 Accounting professional training 74,479 36,354 Continuing professional development 29,161 17,245 Other income 129,962 164,747

302,829 266,063

16 FINANCE INCOME AND COSTS

Finance income:- Interest income on short term deposits 932 3,419

Finance costs:- Interest expense (20) (1,319)- Net foreign exchange losses (22,545) (4,178)Total finance costs (22,564) (5,497)

Net finance costs (21,632) (2,078)


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17 RETIREMENT BENEFIT OBLIGATIONS

The Institute of Chartered Accountants of Zimbabwe Pension FundBoth employees and the Institute contribute to a defined contribution plan which is administered by a separate board of trustees. This fund is subject to the Pension and Provident Funds Act (Chapter 24:09).

National Social Security Authority (NSSA) SchemeThe Institute and its employees also contribute to the National Social Security Authority Scheme. This is a social security scheme which was promulgated under the National Social Security Act. The Institute’s obligations under the scheme are limited to specific contributions legislated from time to time.

Contributions to the schemes, recognised in profit or loss were as follows:

2016 2015US$ US$

The Institute of Chartered Accountants of Zimbabwe Pension Fund 45,646 47,892 NSSA 15,257 11,256

60,903 59,148

18 RELATED PARTY TRANSACTIONS

The following transactions were carried out with related parties:

Salaries and other benefits 261,069 284,568

Loans to key management 9,764 3,131

Purchase of motor vehicle 7,960 -

19 CAPITAL COMMITMENTS

There were no capital commitments at reporting date (2015: US$ nil).


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21 EVENTS AFTER THE REPORTING PERIOD

Management are not aware of any material events after the reporting date that may have a significant impact on the information contained in this report.

22 CONTINGENT LIABILITY

The Institute is subject to evaluation by tax authorities and to litigation including tax claims and employee disputes. These matters are inherently difficult to quantify. In appropriate cases, a provision is recognised based on best estimates and management judgement but there can be no guarantee that these provisions will result in an accurate prediction of the actual costs and liabilities will eventually be incurred.


20 GOING CONCERN

The Institute has reported a surplus of US$ 36 087 (2015: deficit US$102 731) for the year ended 31 May 2016. However, as at that date:

• current assets were exceeded by current liabilities by US$ 443 940 (2015: US$525 417); • there in a negative equity position of US$ 113,859 (2015: US$149 946); and• the Institute recorded negative cash flows of US$97 409 in the current year.

Whilst management have put in place measures to preserve cash and secure additional finance, these circumstances create material uncertainties over future operating results and cash flows. Management have concluded that the combination of these circumstances represents a material uncertainty that casts significant doubt upon the Institute’s ability to continue as a going concern and that, therefore, the Institute may be unable to realise its assets and discharge its liabilities in the normal course of business.

However, after considering the uncertainties described above, management have a reasonable expectation that the Institute has adequate resources to continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

The following are some of the key initiatives in place that support the continued preparation of the Institute’s financial statements on a going concern basis:

• The current economic environment continues to cause challenges and as such the Institute has entered into negotiations with its creditors for staggered payment terms. Management anticipates a positive outcome as some of these requests have been granted already.

As a result of the negotiations described above, management and the Council of ICAZ are confident that the Institute will be able to meet the mandatory payments on its liabilities as disclosed in note 11.

• In order to improve the operating cash flow under the current economic environment, the Institute is diversifying its sources of income and engaging in various activities to improve its financial flows. A project has already been taken up with IFAC to professionalise Public Sector Accountants.

• The Institute has commenced the process of negotiating new contracts with institutions such as Gordon Institute of Business Science (South Africa) and the University of Cape town (South Africa) to offer executive programs which will result in improved cash flows for the Institute.

• The Institute’s cost structures have been reviewed in order to ensure that financial and operating activities are sustainable.

• Management are confident of members’ commitment to support the Institute given that in the current year a supplementary billing was done in a bid to raise additional funds to settle obligations.

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Notes

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INSTITUTE OF CHARTERED ACCOUNTANTS OF ZIMBABWE

Integrity House2 Bath Road

Belgravia, Harare

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